Landsea Homes Reports Fourth Quarter and Full Year 2020 Results, Reiterates Strong 2021 Outlook

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NEWPORT BEACH, Calif., March 11, 2021 (GLOBE NEWSWIRE) — Landsea Homes Corporation (Nasdaq: LSEA) (“Landsea Homes” or the “Company”), a publicly traded residential homebuilder, reported financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Summary vs. Same Year-Ago Quarter

  • Total revenue was $284.7 million compared to $286.1 million.
  • Excluding lot sales from total revenue, total home sales increased 3{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to $284.7 million compared to $275.2 million.
  • Total homes delivered increased 111{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 587 homes compared to 278.
  • Net new home orders increased 182{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 415 with an average sales price of $567,000 and a monthly absorption rate of 4.5 sales per active community compared to 147 net new home orders with an average sales price of $888,000 and a monthly absorption rate of 2.4 sales per active community.
  • Average selling communities increased 53{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 31.0 compared to 20.3.
  • Total homes in backlog increased 520{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 750 homes with a dollar value of $389.3 million and an average sales price of $519,000 at December 31, 2020, compared to 121 homes with a dollar value of $84.0 million and an average sales price of $694,000 at December 31, 2019.
  • Gross profit as percentage of revenue was 15.0{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to 15.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}.
  • Adjusted homes sales gross margin was 22.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to 23.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}.

Full Year 2020 Summary vs. Year-Ago

  • Total revenue increased 16{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to $734.6 million compared to $631.0 million.
  • Excluding lot sales from total revenue, total home sales increased 29{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to $734.6 million compared to $568.9 million.
  • Total homes delivered increased 156{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 1,527 homes compared to 597.
  • Net new home orders increased 294{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 1,891 with an average sales price of $512,000 and a monthly absorption rate of 5.2 sales per active community compared to 480 net new home orders with an average sales price of $961,000 and a monthly absorption rate of 2.7 sales per active community.
  • Average selling communities increased 74{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 30.4 compared to 17.5.
  • Gross profit as percentage of revenue was 12.9{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to 15.8{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}.
  • Adjusted home sales gross margin was 20.7{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to 23.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}.

Management Commentary

“As we reported in our preliminary results last month, we closed out 2020 with one of the strongest quarters in our history,” said John Ho, CEO of Landsea Homes. “These results are a direct reflection of our team’s ability to swiftly execute our strategic shift to selling a higher volume of more affordable home offerings, and we are especially proud to have done so during the COVID-19 pandemic. While we were able to significantly increase the total number of homes delivered, we also closed out the year with a substantial backlog that increased over sixfold from 2019, setting us up for continued success this year.

“In fact, we believe the housing market is poised to be one of the strongest in recent memory. The vast majority of Americans are continuing to work from home, and we have more millennials than ever looking for entry and move-up level homes as they hope to take advantage of the current low interest rate environment. If you combine these favorable macroeconomic conditions with the recent influx in capital from our business combination, our innovative and unique High Performance Homes and LiveFlex™ offerings, and our strategic shift into high-growth, affordable housing markets, we are well positioned to increase shareholder value.”

Fourth Quarter 2020 Financial and Operational Results

Total revenue was $284.7 million compared to $286.1 million in the fourth quarter of 2019. The slight decline was primarily due to the Company not having any lot sales in the fourth quarter of 2020 compared to $11.0 million in the same period of 2019. Excluding lot sales from total revenue, total home sales increased 3{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to $284.7 million compared to $275.2 million in the fourth quarter of 2019.

Total homes delivered increased 111{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 587 homes at an average sales price of $485,000 compared to 278 homes delivered at an average sales price of $990,000 in the fourth quarter of 2019.

Net new home orders increased 182{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 415 homes with a dollar value of $235.4 million, an average sales price of $567,000 and a monthly absorption rate of 4.5 sales per active community compared to 147 homes with a dollar value of $130.6 million, an average sales price of $888,000 and a monthly absorption rate of 2.4 sales per active community in the prior year period. The decline in average sales price remains consistent with the Company’s strategic shift to selling a higher volume of entry and move-up level homes, along with having a higher percentage of orders in Arizona.  

Home sales gross margin increased 10 basis points to 15.0{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to 14.9{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in the prior year period. Adjusted home sales gross margin (a non-GAAP measure) was 22.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to 23.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in the prior year period. The decline was primarily driven by lower interest in cost of home sales and higher purchase price accounting for acquired inventory.

Net income attributable to Landsea Homes was $10.7 million compared to $12.9 million in the prior year period. Adjusted net income attributable to Landsea Homes (a non-GAAP measure) was $19.4 million compared to $21.2 million in the prior year period. The slight decline was primarily a result of an increase in sales and marketing expenses related to promoting a broader base of new housing developments for sale and an increase in sales tax from the Arizona market.

Adjusted EBITDA (a non-GAAP measure) was $36.1 million compared to $40.0 million in the prior year quarter, with the decline primarily driven by the aforementioned increase in operating expenses.

Full Year 2020 Financial and Operational Results

Total revenue increased 16{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to $734.6 million compared to $631.0 million in 2019, with total home sales increasing 29{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to the prior year. The Company did not have any lot sales in 2020 compared to $62.1 million in 2019.

Total homes delivered increased 156{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 1,527 homes at an average sales price of $481,000 compared to 597 homes delivered at an average sales price of $953,000 in 2019.

Net new home orders increased 294{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 1,891 homes with a dollar value of $968.4 million, an average sales price of $512,000 and a monthly absorption rate of 5.2 sales per active community compared to 480 homes with a dollar value of $461.3 million, an average sales price of $961,000 and a monthly absorption rate of 2.7 sales per active community in the prior year. The decline in average sales price is a result of the aforementioned strategic shift to sell a higher volume of entry and move-up level homes across geographies with lower price points.

Total homes in backlog increased 520{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 750 homes with a dollar value of $389.3 million and an average sales price of $519,000 at December 31, 2020, compared to 121 homes with a dollar value of $84.0 million and an average sales price of $694,000 at December 31, 2019. Total lots owned or controlled at December 31, 2020, increased 41{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 6,680 compared to 4,724 at December 31, 2019.

Home sales gross margin was 12.9{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to 16.0{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in the prior year. Adjusted home sales gross margin (a non-GAAP measure) was 20.7{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} compared to 23.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in 2019. The decline was a result of COVID-related incentives and job site expenses, along with the aforementioned increased purchase price accounting adjustments.

Net loss attributable to Landsea Homes was $9.0 million compared to net income of $17.2 million in the prior year. The decrease was a result of a significant increase in the purchase price accounting adjustments for acquired inventory of Garrett Walker Homes, along with higher sales and marketing expenses related to the increase in sales tax from the Arizona market. Adjusted net income attributable to Landsea Homes (a non-GAAP measure) was $28.0 million compared to $37.9 million in the prior year.

Adjusted EBITDA (a non-GAAP measure) was $65.0 million compared to $73.9 million in 2019.

Liquidity

At December 31, 2020, cash and cash equivalents totaled $105.8 million compared to $154.0 million at December 31, 2019. Total debt was $264.8 million compared to $190.0 million at December 31, 2019. As a reminder, the Company’s balance sheet at December 31, 2020, does not reflect the influx of approximately $107 million in net proceeds from the closing of the business combination with LF Capital Acquisition Corporation (“LF Capital”) on January 7, 2021 (the “Business Combination”).

Landsea Homes’ ratio of debt to capital was 33.3{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} at December 31, 2020, compared to 24.6{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} at December 31, 2019. The Company’s net debt to net book capitalization was 22.6{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} at December 31, 2020, compared to 5.4{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} at December 31, 2019.

2021 Outlook

Landsea Homes currently expects to report approximately $883 million in total revenue for 2021, with total homes delivered of 1,979 at an average sales price of $446,000. The Company also expects to report adjusted net income attributable to Landsea Homes of approximately $44 million in 2021. These expectations for 2021 are being driven by organic growth, along with the benefit from potential near-term acquisition targets.

Conference Call

The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its fourth quarter and full year 2020 results.

Date: Thursday, March 11, 2021Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)Toll-free dial-in number: 1-833-672-0663International dial-in number: 1-929-517-0343Conference ID: 9975165

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here and via the Investors section of the Landsea Homes website at https://ir.landseahomes.com/.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through March 18, 2021.

Toll-free replay number: 1-855-859-2056International replay number: 1-404-537-3406Replay ID: 9975165

About Landsea Homes

Landsea Homes Corporation (Nasdaq: LSEA) is a publicly traded residential homebuilder based in Newport Beach, CA that designs and builds best-in-class homes and sustainable master-planned communities in some of the nation’s most desirable markets. The company has developed homes and communities in New York, Boston, New Jersey, Arizona, and throughout California in Silicon Valley, Los Angeles and Orange County.

An award-winning homebuilder that builds suburban, single-family detached and attached homes, mid-and high-rise properties, and master-planned communities, Landsea Homes is known for creating inspired places that reflect modern living and provides homebuyers the opportunity to “Live in Your Element.” Our homes allow people to live where they want to live, how they want to live – in a home created especially for them.

Driven by a pioneering commitment to sustainability, Landsea Homes’ High Performance collection features homes that are responsibly designed to take advantage of the latest innovations with home automation technology supported by Apple®. Homes in this collection include features that make life easier and provide energy savings that allow for more comfortable living at a lower cost through sustainability features that contribute to healthier living for both homeowners and the planet.

Our Garrett-Walker collection offers unique, affordably priced and value-based single-family homes in some of the nation’s fastest growing and most desirable markets. Homebuyers enjoy the confidence of owning a quality home that provides lasting value. One of the most trusted brands in the region, this collection continues to attract everyone from first-time homeowners to those seeking more room for their growing families.

Led by a veteran team of industry professionals who boast years of worldwide experience and deep local expertise, Landsea Homes is committed to positively enhancing the lives of our homebuyers, employees and stakeholders by creating an unparalleled lifestyle experience that is unmatched.

For more information on Landsea Homes, visit: www.landseahomes.com.

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws, including, but not limited to, our expectations for future financial performance, business strategies or expectations for our business, including as they relate to anticipated effects of the Business Combination. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Landsea Homes cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Words such as “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” “look” or similar expressions may identify forward-looking statements. Specifically, forward-looking statements may include statements relating to:

  • the benefits of the Business Combination;
  • the future financial performance of the Company following the Business Combination;
  • changes in the market for Landsea Homes’ products and services; and
  • expansion plans and opportunities.

These forward-looking statements are based on information available as of the date of this press release and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

These risks and uncertainties include, but not are limited to, the risk factors described by Landsea Homes in its filings with the Securities and Exchange Commission (“SEC”). These risk factors and those identified elsewhere in this press release, among others, could cause actual results to differ materially from historical performance and include, but are not limited to:

  • the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability to integrate the combined businesses, and the ability of the combined business to grow and manage growth profitably;
  • costs related to the Business Combination;
  • the ability to maintain the listing of Landsea Homes’ securities on Nasdaq;
  • the outcome of any legal proceedings that may be instituted against the Company following consummation of the Business Combination;
  • changes in applicable laws or regulations;
  • the inability to launch new Landsea Homes products or services or to profitably expand into new markets;
  • the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and
  • other risks and uncertainties indicated in Landsea Homes’ SEC reports or documents filed or to be filed with the SEC by Landsea Homes.

Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and you should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Investor Relations Contact:

Cody Slach or Cody CreeGateway Investor Relations[email protected] (949) 574-3860

Media Contact:

Annie NoebelCornerstone Communications[email protected](949) 449-2527

Landsea Homes CorporationConsolidated Statements of Operations

  Three Months Ended December 31,   Year Ended December 31,
  2020   2019   2020   2019
   
  (dollars in thousands, except per share amounts)
Revenue              
Home sales $ 284,738     $ 275,188     $ 734,608     $ 568,872  
Lot sales     10,951         62,116  
Total revenue 284,738     286,139     734,608     630,988  
               
Cost of sales              
Home sales 242,124     234,121     636,324     478,054  
Inventory impairments         3,413      
Lot sales     8,896         53,475  
Total cost of sales 242,124     243,017     639,737     531,529  
               
Gross margin              
Home sales 42,614     41,067     94,871     90,818  
Lot sales     2,055         8,641  
Total gross margin 42,614     43,122     94,871     99,459  
               
Sales and marketing expenses 16,577     11,802     48,100     26,522  
General and administrative expenses 11,266     11,599     42,598     34,884  
Total operating expenses 27,843     23,401     90,698     61,406  
               
Income from operations 14,771     19,721     4,173     38,053  
               
Other income (expense), net (267)     (817)     80     (1,602)  
Interest expense              
Equity in net income (loss) of unconsolidated joint ventures (189)     (403)     (16,418)     (7,901)  
Pretax (loss) income 14,315     18,501     (12,165)     28,550  
               
(Benefit) provision for income taxes 3,657     3,562     (3,081)     6,159  
               
Net (loss) income 10,658     14,939     (9,084)     22,391  
Net (loss) income attributable to noncontrolling interests (13)     2,021     (133)     5,191  
Net (loss) income attributable to Landsea Homes Incorporated $ 10,671     $ 12,918     $ (8,951)     $ 17,200  
               
Earnings (loss) per share:              
Basic and diluted $ 10,671     $ 12,918     $ (8,951)     $ 17,200  
               
Weighted average shares outstanding:              
Basic and diluted 1,000     1,000     1,000     1,000  

Landsea Homes CorporationConsolidated Balance Sheets

  December 31,
  2020   2019
   
  (dollars in thousands)
Assets      
Cash and cash equivalents $ 105,778     $ 154,043  
Cash held in escrow 11,618     8,836  
Restricted cash 4,270     2,335  
Real estate inventories 687,819     598,179  
Due from affiliates 2,663     432  
Investment in and advances to unconsolidated joint ventures 21,342     42,956  
Notes receivable from lot sales     25  
Goodwill 20,705     5,315  
Other assets 41,569     27,096  
Total assets $ 895,764     $ 839,217  
       
Liabilities      
Accounts payable $ 36,243     $ 16,490  
Accrued expenses and other liabilities 62,869     48,046  
Due to affiliates 2,357     1,347  
Notes and other debts payable, net 264,809     189,964  
Total liabilities 366,278     255,847  
       
Commitments and contingencies      
       
Equity      
Stockholders’ equity:      
Common stock, $0.0001 par value, 1,000 shares authorized and outstanding as of December 31, 2020 and December 31, 2019      
Additional paid-in capital 496,174     524,516  
Retained earnings 32,011     40,962  
Total stockholders’ equity 528,185     565,478  
Noncontrolling interests 1,301     17,892  
Total equity 529,486     583,370  
Total liabilities and equity $ 895,764     $ 839,217  

Home Deliveries and Home Sales Revenue

  Three Months Ended December 31,
  2020   2019   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} Change
  Homes   DollarValue   ASP   Homes   DollarValue   ASP   Homes   DollarValue   ASP
   
  (dollars in thousands)
Arizona 419     $ 126,308     $ 301     58     $ 17,591     $ 303     622 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   618 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (1) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
California 168     158,430     943     220     257,597     1,171     (24) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (38) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (19) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Metro New York                         N/A   N/A   N/A
Total 587     $ 284,738     $ 485     278     $ 275,188     $ 990     111 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   3 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (51) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
  Year Ended December 31,
  2020   2019   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} Change
  Homes   DollarValue   ASP   Homes   DollarValue   ASP   Homes   DollarValue   ASP
   
  (dollars in thousands)
Arizona 1,104     $ 320,691     $ 290     133     $ 40,024     $ 301     730 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   701 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (4) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
California 423     413,917     979     464     528,848     1,140     (9) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (22) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (14) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Metro New York                         N/A   N/A   N/A
Total 1,527     $ 734,608     $ 481     597     $ 568,872     $ 953     156 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   29 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (50) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}

Net New Home Orders, Dollar Value of Orders, and Monthly Absorption Rates

  Three Months Ended December 31,
  2020   2019   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} Change
  Homes DollarValue ASP MonthlyAbsorptionRate   Homes DollarValue ASP MonthlyAbsorptionRate   Homes DollarValue ASP MonthlyAbsorptionRate
   
  (dollars in thousands)
Arizona 274   $ 96,196   $ 351   5.0     39   $ 12,310,000   $ 316   2.1     603 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 681 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 11 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 138 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
California 141   139,196   987   3.7     108   118,274   1,095   2.6     31 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 18 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} (10 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}) 42 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Metro New York                     N/A N/A N/A N/A
Total 415   $ 235,392   $ 567   4.5     147   $ 130,584   $ 888   2.4     182 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 80 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} (36 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}) 88 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
  Year Ended December 31,
  2020   2019   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} Change
  Homes DollarValue ASP MonthlyAbsorptionRate   Homes DollarValue ASP MonthlyAbsorptionRate   Homes DollarValue ASP MonthlyAbsorptionRate
   
  (dollars in thousands)
Arizona (¹) 1,283   $ 402,338   $ 314   5.7     104   $ 31,192,000   $ 300   2.6     1,134 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 1,190 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 119 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
California 608   566,078   931   4.4     376   430,133   1,144   2.7     62 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 32 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} (19 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}) 63 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Metro New York                     N/A N/A N/A N/A
Total 1,891   $ 968,416   $ 512   5.2     480   $ 461,325   $ 961   2.7     294 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} 110 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} (47 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}) 93 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}

(1)   Monthly Absorption Rate for Arizona in 2019 is based on seven months for the time subsequent to the acquisition of Pinnacle West in June 2019.

Average Selling Communities

    Three Months Ended December 31,   Year Ended December 31,
    2020 2019 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} Change   2020 2019 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} Change
Arizona (¹)   18.3   6.3   190 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   18.8   5.7   230 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
California   12.7   14.0   (9) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   11.6   11.8   (2) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Metro New York       N/A       N/A
Total   31.0   20.3   53 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   30.4   17.5   74 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}

(1)   Average selling communities calculation for Arizona for the year ended 2019 is based on seven months, for the time subsequent to the acquisition of Pinnacle West in June 2019.

Backlog

  December 31, 2020   December 31, 2019   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} Change
  Homes   DollarValue   ASP   Homes   DollarValue   ASP   Homes   DollarValue   ASP
   
  (dollars in thousands)
Arizona 508     $ 172,932     $ 340     64     $ 19,700     $ 308     694 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   778 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   10 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
California 242     216,410     894     57     64,255     1,127     325 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   237 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (21) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Metro New York                         N/A   N/A   N/A
Total 750     $ 389,342     $ 519     121     $ 83,955     $ 694     520 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   364 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   (25) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}

Lots Owned or Controlled

  December 31, 2020   December 31, 2019    
  Lots Owned LotsControlled Total   Lots Owned LotsControlled Total   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} Change
Arizona 3,094   1,770   4,864     645   2,596   3,241     50 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
California 1,104   662   1,766     923   490   1,413     25 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Metro New York 50     50     70     70     (29) {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Total 4,248   2,432   6,680     1,638   3,086   4,724     41 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}

Home Sales Gross Margins

Home sales gross margin measures the price achieved on delivered homes compared to the costs needed to build the home. In the following table, we calculate gross margins adjusting for interest in cost of sales, inventory impairments (if applicable), and purchase price accounting for acquired work in process inventory (if applicable). This non-GAAP financial measure should not be used as a substitute for the Company’s operating results in accordance with GAAP. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. We believe this non-GAAP measure is meaningful because it provides insight into the impact that financing arrangements and acquisitions have on our homebuilding gross margin and allows for comparability of our gross margins to competitors that present similar information 

  Three Months Ended December 31,
  2020   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   2019   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
   
  (dollars in thousands)
Home sales revenue $ 284,738     100.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   $ 275,188     100.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Cost of home sales 242,124     85.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   234,121     85.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Home sales gross margin 42,614     15.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   41,067     14.9 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Add: Interest in cost of home sales 14,348     5.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   22,206     8.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Add: Inventory impairments     {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}       {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Adjusted home sales gross margin excluding interest and inventory impairments (1) 56,962     20.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   63,273     23.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Add: Purchase price accounting for acquired inventory 6,024     2.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   1,438     0.5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Adjusted home sales gross margin excluding interest, inventory impairments, and purchase price accounting for acquired inventory $ 62,986     22.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   $ 64,711     23.5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
  Year Ended December 31,
  2020   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   2019   {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
   
  (dollars in thousands)
Home sales revenue $ 734,608     100.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   $ 568,872     100.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Cost of home sales 639,737     87.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   478,054     84.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Home sales gross margin 94,871     12.9 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   90,818     16.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Add: Interest in cost of home sales 37,926     5.2 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   40,262     7.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Add: Inventory impairments 3,413     0.5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}       {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Adjusted home sales gross margin excluding interest and inventory impairments (1) 136,210     18.5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   131,080     23.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Add: Purchase price accounting for acquired inventory 15,519     2.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   2,874     0.5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Adjusted home sales gross margin excluding interest, inventory impairments, and purchase price accounting for acquired inventory $ 151,729     20.7 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   $ 133,954     23.5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}

EBITDA and Adjusted EBITDA

The following table presents EBITDA and Adjusted EBITDA for the three months and years ended December 31, 2020 and 2019. Adjusted EBITDA is a non-GAAP financial measure used in evaluating operating performance. We define Adjusted EBITDA as net income before (i) income tax expense (benefit), (ii) interest expenses, (iii) depreciation and amortization, (iv) inventory impairments, (v) purchase accounting adjustments for acquired work in process inventory related to business combinations, (vi) (gain) loss on debt extinguishment, (vii) transaction costs related to business combinations, and (viii) the impact of income or loss allocations from our unconsolidated joint ventures. We believe Adjusted EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest, effective tax rates, levels of depreciation and amortization, and items considered to be non-recurring. The economic activity related to our unconsolidated joint ventures is not core to our operations and is the reason we have excluded those amounts. Accordingly, we believe this measure is useful for comparing our core operating performance from period to period. Our presentation of Adjusted EBITDA should not be considered as an indication that our future results will be unaffected by unusual or non-recurring items.

  Three Months Ended December 31,
  2020   2019
   
  (dollars in thousands)
Net (loss) income $ 10,658     $ 14,939  
(Benefit) provision for income taxes 3,657     3,562  
Interest in cost of sales 14,348     22,237  
Interest relieved to equity in net income (loss) of unconsolidated joint ventures 247     281  
Interest expense 4      
Depreciation and amortization expense 896     800  
EBITDA 29,810     41,819  
Inventory impairments      
Purchase price accounting in cost of home sales 6,024     1,438  
Transaction costs 322     190  
Equity in net loss (income) of unconsolidated joint ventures, net of interest (58)     122  
Less: Imputed interest in cost of sales (1)     (3,558)  
Adjusted EBITDA $ 36,098     $ 40,011  

(1)   Imputed interest related to a land banking transaction that was treated as a product financing arrangement.

  Year Ended December 31,
  2020   2019
   
  (dollars in thousands)
Net (loss) income $ (9,084)     $ 22,391  
(Benefit) provision for income taxes (3,081)     6,159  
Interest in cost of sales 37,926     40,393  
Interest relieved to equity in net income (loss) of unconsolidated joint ventures 1,162     1,934  
Interest expense 15      
Depreciation and amortization expense 3,580     2,960  
EBITDA 30,518     73,837  
Inventory impairments 3,413      
Purchase price accounting in cost of home sales 15,519     2,874  
Transaction costs 1,031     1,220  
Equity in net loss (income) of unconsolidated joint ventures, net of interest 15,256     5,967  
Less: Imputed interest in cost of sales (1) (776)     (10,024)  
Adjusted EBITDA $ 64,961     $ 73,874  

(1)   Imputed interest related to a land banking transaction that was treated as a product financing arrangement.

Adjusted Net Income

Adjusted Net Income to Landsea is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in evaluating our operating results and understanding our operating results without the effect of certain expenses that were historically pushed down by our parent company and other non-recurring items. We believe excluding these items provides a more comparable assessment of our financial results from period to period. Adjusted Net Income to Landsea is calculated by excluding the effects of related party interest that was pushed down by our parent company, purchase accounting adjustments for acquired work in process inventory related to business combinations, and the impact from our unconsolidated joint ventures, and tax-effected using a normalized effective tax rate. The economic activity related to our unconsolidated joint ventures is not core to our operations and is the reason we have excluded those amounts. We also adjust for the expense of related party interest pushed down from our parent company as we have no obligation to repay the debt and related interest.

  Three Months Ended December 31,
  2020   2019
   
  (dollars in thousands)
Net (loss) income attributable to Landsea Homes Incorporated $ 10,671     $ 12,918  
       
Inventory impairments      
Previously capitalized related party interest included in cost of sales 5,457     8,390  
Equity in net loss (income) of unconsolidated joint ventures 189     403  
Purchase price accounting for acquired inventory 6,024     1,438  
Total adjustments 11,670     10,231  
Tax-effected adjustments (1) 8,689     8,261  
Adjusted net income (loss) attributable to Landsea Homes Incorporated $ 19,360     $ 21,179  

(1)   For the periods ended December 31, 2020 and 2019 our adjusted income tax expense is reflective of our effective income tax rate, excluding the effects from establishing or releasing a valuation allowance, applied to our adjusted pretax income (loss).

  Year Ended December 31,
  2020   2019
   
  (dollars in thousands)
Net (loss) income attributable to Landsea Homes Incorporated $ (8,951 )   $ 17,200  
       
Inventory impairments 3,413      
Previously capitalized related party interest included in cost of sales 14,110     15,646  
Equity in net loss (income) of unconsolidated joint ventures 16,418     7,901  
Purchase price accounting for acquired inventory 15,519     2,874  
Total adjustments 49,460     26,421  
Tax-effected adjustments (1) 36,933     20,721  
Adjusted net income (loss) attributable to Landsea Homes Incorporated $ 27,982     $ 37,921  

(1)   For the years ended December 31, 2020 and 2019 our adjusted income tax expense is reflective of our effective income tax rate, excluding the effects from establishing or releasing a valuation allowance, applied to our adjusted pretax income (loss).

Net Debt to Net Capital

The following table presents the ratio of debt to capital as well as the ratio of net debt to net capital which is a non-GAAP financial measure. The ratio of debt to capital is computed as the quotient obtained by dividing total debt, net of issuance costs, by total capital (sum of total debt, net of issuance costs plus total equity).

The non-GAAP ratio of net debt to net capital is computed as the quotient obtained by dividing net debt (which is total debt, net of issuance costs less cash, cash equivalents and restricted cash to the extent necessary to reduce the debt balance to zero) by net capital (sum of net debt plus total equity). The most comparable GAAP financial measure is the ratio of debt to capital. We believe the ratio of net debt to net capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. We believe that by deducting our cash from our debt, we provide a measure of our indebtedness that takes into account our cash liquidity. We believe this provides useful information as the ratio of debt to capital does not take into account our liquidity and we believe that the ratio of net debt to net capital provides supplemental information by which our financial position may be considered. Investors may also find this to be helpful when comparing our leverage to the leverage of our competitors that present similar information.

See table below reconciling this non-GAAP measure to the ratio of debt to capital.

  December 31,
  2020   2019
   
  (dollars in thousands)
Total notes and other debts payable, net $ 264,809     $ 189,964  
Total equity 529,486     583,370  
Total capital $ 794,295     $ 773,334  
Ratio of debt to capital 33.3 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   24.6 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
       
Total notes and other debts payable, net $ 264,809     $ 189,964  
Less: cash, cash equivalents and restricted cash 110,048     156,378  
Net debt 154,761     33,586  
Total equity 529,486     583,370  
Net capital $ 684,247     $ 616,956  
Ratio of net debt to net capital 22.6 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}   5.4 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}

Source: Landsea Homes